Provisional Translation

Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, July 2, 2019, 11:00 am to 11:19 am)

[Opening remarks:]

I would like to inform you of executive changes at the Financial Services Agency, which are detailed in the material you have been given and were approved by the Cabinet today. The changes will take effect on July 5.At the Financial Services Agency, Mr. Sasaki, Director-General of the Strategy Development and Management Bureau, will be honorably retiring, and Mr. Morita, Secretary-General of the Securities and Exchange Surveillance Commission (SESC), will be appointed to replace him. His successor as Secretary-General of the SESC will be Mr. Furusawa, Deputy Director-General of the Policy and Markets Bureau (in charge of corporate disclosure, accounting, and corporate governance). Mr. Mitsui, Director-General of the Policy and Markets Bureau, will also be honorably retiring, and Mr. Nakajima, Vice Commissioner for Strategy Development and Management, will be appointed to replace him. His successor as Vice Commissioner for Strategy Development and Management will be Mr. Shirakawa, Vice Commissioner for International Affairs. Mr. Endo, Commissioner, Mr. Himino, Vice Minister for International Affairs, and Mr. Kurita, Director-General of the Supervision Bureau, will remain in their present posts. This concludes my statement on personnel changes at the Financial Services Agency.

[Questions and answers:]

Q.

I’d like to ask you a question about Facebook. The other day Facebook announced that it would be entering the cryptoasset business, and as they’re using the term “cryptoassets,” we have to translate that into Japanese, so we’re using the term angou-shisan (cryptoassets).

A.

All official documents have been revised to change the term to angou-shisan (cryptoassets).

Q.

What’s clear is that they’re talking about something different from the exchange service provider model that was popular in the days when people talked about virtual currencies. In Japan, lots of action has been taken, such as the amendment of the Payment Services Act, to address the situation with cryptoasset exchange service providers. But with Facebook now coming out and saying they’re going to do this, I’d like to hear the Minister’s views on what sorts of principles, rules, or regulations will be applied.

A.

There are all sorts of things going on right now, and various things have happened in the past, such as the Coincheck incident. But in the case of Facebook, it is going to offer a stablecoin, which has its value pegged to another asset. Facebook is said to have around 2.7 billion users, so 2.7 billion holders of a stablecoin will be a substantial amount. Regarding recent developments in this area, the G20 declaration stated that a careful eye would need to be kept on developments with cryptoassets. So we will need to consider the risks that are emerging, and there has been talk about remaining vigilant, and new agreements have been reached for seeking advice from the Financial Stability Board (FSB), and other standards-setting bodies, such as the Basel Committee, concerning required responses, and regarding this cryptoasset, Libra, that Facebook is planning to come out with, I think that in the light of the declaration at the G20 Osaka Summit, that the FSB and other standards-setting bodies, as well as bodies like the Basel Committee, will move forward with taking whatever steps are necessary, such as monitoring. Japan, for its part, must maintain close international cooperation, and decide on what action to take. At the moment, a lot of things have yet to be clarified, so we can’t yet see clearly what is going to happen, but Facebook is said to be conducting various considerations from now on.

Q.

So you’re going to be considering the matter, and is it reasonable to interpret that you’re going to be deciding which FSA department will be handling it, whether it will be the bureau currently in charge of cryptoassets, and whether it will be treated as funds transfer business or banking, and so on?

A.

Because this is currently the fastest way of transferring assets, and it’s a blockchain, and things like that have the potential to grow rapidly in the future. This is what Japan is best at, and with that also in mind, regarding what we are going to do going forward, China and South Korea have already decided to move in the direction of prohibition, but if it turns into something widely accepted, then it will have a significant impact on the financial industry. Remittance fees will drop sharply, so in that sense, it’s highly meaningful, thus we are not going to go for prohibition. But we will have to keep a careful eye on things, so until then, we have to prevent the users being harmed. We have to consider how to prevent people who have invested their money in cryptoassets being harmed, and at the same time, I think we need to keep our eye on, rather than opting for prohibition, how to nurture that area, whether it’s taking on another form, and so on.

Q.

Please tell us about the report from the Financial System Council. I think that from now, under the new structure of the FSA, the Financial System Council must fulfill what it claimed to be its original purpose, namely to urge people to build assets, and that it must proceed with in-depth discussions, which had come to a halt as a result of a series of problems. But regarding the retention of Mr. Endo as Commissioner, which you announced just now, please tell us once again whether you want the FSA to move forward doing what it should be doing, including bringing this matter to a close, and what that should be under the new structure.

A.

Public pensions are the so called pillar of life design in old age, so I think that the government as a whole, particularly the Ministry of Health, Labour and Welfare, has been working hard to create a public-pension system that will be sustainable long into the future. To that end, I believe that the FSA, for its part, needs to establish a system that will help stable asset building for individuals based on their own personal needs, and from this standpoint, the FSA needs to ensure that business is conducted in a customer-oriented manner. For example, in the case of stocks, the brokers make more profits the more stock trades there are, and for many years it’s been said that this results in stocks that really needn’t be sold being sold and other ones being bought. So in that sense the FSA must also take action to ensure that services and financial products that are aligned with the needs and interests of the customers. There’s also the issue of the aging of society, and there are concerns that elderly people who don’t really understand the products could be deceived, as not everyone is going to have good intentions, so we need to consider how we’re going to deal with all sorts of issues. I think it’s important, by popularizing“Tsumitate NISA (Dollar-Cost Averaging NISA)” and various other vehicles, to firmly establish investment methods that are long term, built up over time, and diversified. So we have to urge financial institutions to firmly establish such investment methods. At the moment, over half of all individual financial assets, which are said to amount to one thousand and several hundred trillion yen, are in cash and deposits. With these ultra-low interest rates environment, assets are not going to increase by much with interest alone. Therefore, I think we need to consider various different things with respect to safe investments for our old age, and I think that the FSA will also have to consider these sorts of safe initiatives going forward.

Q.

I guess you’ve made various judgments, but as the Minister, are you also sending a message to Commissioner Endo to do a proper job in that regard?

A.

I am.

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